EU relations with Tunisia

Six years on from the 2011 Revolution, Tunisian people have paved the way for a modern democracy based on freedoms, socio-economic development and social justice. The European Union has been supporting Tunisia in this process, reinforcing bilateral relations and cooperation in key areas.

Advertisement

EU support for transition in Tunisia

In the immediate aftermath of the 2011 Revolution the EU pledged to
support the Tunisian people's transition towards greater democracy,
freedom and social justice. Against this new backdrop, the EU and
Tunisia – natural partners given their geographical, cultural and trade
links – established a 'Privileged Partnership' in 2012 and an ambitious
action plan for its implementation.

The special status granted to Tunisia, one of the EU's Southern
Neighbourhood partners, reflects the Union's commitment to supporting
Tunisia's transition as it tackles a number of interrelated challenges
in a fragile regional context: the consolidation of democracy (primarily
by implementing the Constitution of January 2014), difficult
socio-economic conditions (including high youth unemployment) and the
terrorist threat. It also gives practical expression to the shared
ambition of strengthening bilateral relations in every possible field —
politics, culture, the economy, trade and security — and of stepping up
exchanges between our societies. This joint aim has been voiced at the
highest political level, in particular upon the adoption of the Joint Communication "Strengthening EU support for Tunisia" on 29th September 2016, in the framework of 17th October EU council conclusions on Tunisia and more recently during the visit of the HR/VP Federica Mogherini in Tunis on 1st November 2016. The visit of President Essebsi in Brussels on 1st December was the occasion to reiterate those commitments, and for the HR/VP and President Essebsi to launch together the EU-Tunisia Youth Partnership.

EU-Tunisia political dialogue has increased significantly since the
Revolution, with regular high-level exchanges and visits as well as
thematic dialogues, within the framework of the Association Agreement
(subcommittees) and sectoral agreements EU-Tunisia (eg Joint Committee
on Mobility Partnership, Scientific Committee). The work of the
EU-Tunisia Joint Parliamentary Committee started in 2016 and a third
session took place on the occasion of the Tunisian week in the European
Parliament from 2 to 5 May 2017.

Under the 'Privileged Partnership' and in view of Tunisia's unique
circumstances, the EU strives to ensure that its sectoral policies
identify every possible opportunity for supporting the country's
transition and strengthening ties between Tunisians and Europeans.

Lastly, Tunisian civil society, which played a key role in the
transition (hence the award of the Nobel Peace Prize to the National
Dialogue Quartet in 2015), is closely involved in the process, primarily
through the regular tripartite dialogues on the main areas of
EU-Tunisia cooperation which take place before each of our
subcommittee meetings.

Since 2011, the EU has more than doubled its financial contribution
to cooperation with Tunisia. The country is the principal beneficiary,
in the Southern Neighbourhood, of the 'umbrella' programme, which lends
in recognition of progress made in the field of democracy and human
rights. The combination of grants (over EUR 1.2 billion), macro
financial assistance (MFA - EUR 800 million) and loans, including those
from the European Investment Bank (EUR 1.5 billion), will bring total
support to Tunisia from 2011 to 2016 to approximately EUR 3.5 billion.
The scale of the support reflects the EU's firm commitment to the
country. As well as increased support, the last five years have ushered
in more diverse approaches and forms of assistance to
address Tunisia's needs in the wake of its historic democratic
transition.

In order to provide an optimal response to Tunisia's needs, EU
assistance is currently focused on the following key areas: 1)
socio-economic reforms to foster inclusive growth, competitiveness and
integration; 2) consolidation of the fundamental building blocks of
democracy; 3) sustainable regional and local development.

Huge progress was made in EU-Tunisia relations in 2015 and in the
first half of 2016, with tangible results in the following areas:

- In the field of counter-terrorism and prevention of radicalisation, the political dialogue,
held for the first time in Tunis in September 2015 following the
attacks in Bardo (March) and Sousse (June), saw the EU propose a list of
additional support measures for Tunisia, complementing the extensive
EUR 23 million support programme for security sector reform and
modernisation, launched in November 2015. This will help establish a
modern security policy, in line with democratic values of the new
Tunisian Constitution. A second political dialogue took place on 19th January 2017;

- Negotiations on a future Deep and Comprehensive Free trade Agreement (DCFTA),
a key driver for restoring investment and growth in Tunisia and for the
country's economic and trade integration with the EU, were launched in
October 2015 during the visit to Tunis by EU Trade Commissioner, Cecilia
Malmström. The first round of the negotiations was held in Tunis in
April 2016 and technical meetings have taken in Brussels from 6 to 10
February 2017. Negotiations are guided by the principles of asymmetry
and progressiveness in favour of Tunisia. The EU will support the
negotiations and implementation of the future agreement with an
important package of accompanying measures.

- A tripartite dialogue between the EU institutions, Tunisian civil
society and Tunisian authorities, unique in the region, was launched by
Commissioner Johannes Hahn in Tunis in April 2016 to foster and maintain
relations and close cooperation between civil society and
representatives of the Tunisian and European public authorities with
regard to the key issues and challenges facing Tunisia today to ensure
the democratic transition and guarantee better living conditions for all
citizens;

- The Mobility Partnership (MP), concluded in 2014, provides a
structured and comprehensive framework for the EU-Tunisia political
dialogue on migration, and aims to improve the management of operational
and financial support in this field. The MP with Tunisia has identified
a wide range of priorities for migration management: mobility, legal
migration and integration, the fight against illegal immigration and
human trafficking, return and readmission, border management, migration
and development, asylum and international protection. Over the past two
years, migration was a regular point on the agenda of high-level
meetings with the Tunisian authorities and civil society. Bilateral
commitments under the MP include the opening of negotiations on a visa
facilitation agreement and a readmission agreement. These negotiations
with Tunisia were launched on 12 October 2016.

- A special measure to support Tunisia's vital olive oil industry
was adopted in April 2016, increasing the annual duty-free quota for
two years to boost the Tunisian economy, which has been hard hit by
losses in the tourism sector. Moreover, since 2016, the EU has
facilitated imports of Tunisian olive oil through the abolition of the
monthly sub-quotas that restricted exports of Tunisian olive oil to EU
countries;

- On 1 January 2016, Tunisia became the first Arab country to participate fully in the EU's Horizon 2020 Research and Innovation Programme, which provides new opportunities to Tunisian researchers and academics.

- Tunisia has expressed its interest to be associated to the European commission programme "Creative Europe"
(signing of the agreement foreseen during the Association Council on 11
May 2017). The programme supports initiatives to strengthen the culture
and media sectors, promoting cross-border cooperation, platforms,
networking, literary translation and the distribution of audio-visual
works.

- The joint communication "Strengthening EU support for Tunisia" adopted on 29th
September 2016 by the HR/VP and the Commission on increased support to
Tunisia, is the concrete response of the EU to Tunisia's requests for
increased support, in light of the current difficult situation. The
communication will catalyse synergies, encouraging the EU Institutions
and Member States to support Tunisia's transition, and underpinning the
policy guidelines and priorities of the five-year development plan
adopted by the Tunisian parliament on 12 April 2017. In this context, an
EU high-level delegation is currently attending the Investor Conference
"Tunisia 2020" on 29 and 30 November 2016.

More details:

Funding from the European Commission

Neighbourhood Policy

The EU has pledged to develop close ties with Tunisia and to support
the country's economic and political reforms. Under the European
Neighbourhood Policy (ENP), Tunisia receives financial support from the
EU, mainly through the European Neighbourhood Instrument (ENI). The
indicative ENI budget for the current funding period (2014-2020) is
between EUR 725 million and EUR 886 million. This indicative budget will
certainly increase in the period 2017-2020 as confirmed in the Joint
Communication "Strengthening EU support for Tunisia". The EU envisages
increasing its annual financial assistance in the form of grants to up
to EUR 300 million in 2017 and is committed to maintaining a sustained
level of funding for the period until 2020.

The ENI contribution is supplemented by other EU financial
instruments, including the Instrument contributing to Stability and
Peace (IcSP), the European Instrument for Democracy and Human Rights
(EIDHR), the Neighbourhood Investment Facility (NIF) and thematic
programmes under the Development and Cooperation Instrument (DCI).

Funds from the European Neighbourhood Instrument (ENI) and the European Neighbourhood and Partnership Instrument (ENPI)

Since the 2011 Arab Spring, Tunisia has received grants worth over
EUR 1.2 billion, more than EUR 1 billion of which was provided by the
instruments implementing the European Neighbourhood Policy.

For the 2011-2013 period Tunisia received EUR 445 million in
development assistance under the European Neighbourhood and Partnership
Instrument (ENPI) – nearly twice as much as the amount initially
earmarked for the country for the period. Most of the funding was
allocated to measures to support the economy and the transition to
democracy. The rest was channelled to projects benefiting Tunisian
citizens, especially in disadvantaged regions. The support also included
substantial funding (EUR 155 million) under the SPRING Programme, which
rewards progress on democratic reform and of which Tunisia was the
primary beneficiary in the Southern Neighbourhood region.

EUR 169 million in bilateral aid was provided under the ENI in 2014
with the emphasis on economic recovery, reforms in key sectors (legal
system, media, gender equality, etc.), border management, means of
subsistence in disadvantaged urban areas, and support for civil society.
In 2015 bilateral aid amounted to EUR 186.6 million and supported six
programmes, focusing mainly on economic recovery (including the tourism
industry), reform of the security sector and regional development.
Additional funding was also provided under the incentive-based support
mechanism (EUR 50 million in 2014 and EUR 71.8 million in 2015), which
rewards progress on democratic reform with top-up funds from the
umbrella programme. Four new programmes worth EUR 213,5 million have
been tentatively earmarked for 2016 and will soon be adopted in key
sectors including education and research and innovation, health, local
development and public administration reform.

Trade cooperation between the EU and Tunisia

In July 1995, Tunisia became the first Mediterranean country to sign an Association Agreement with
the EU. The removal of customs duties set out in the Agreement was
completed in 2008, leading to the creation of a free-trade area, the
first ever between the EU and a Mediterranean partner. On 13 October
2015, the European Union opened negotiations in Tunis on a Deep and
Comprehensive Free Trade Agreement (DCFTA), which will build on the
existing free trade area that was established 20 years ago by the
Euro-Mediterranean Association Agreement and focused mainly on trade in
goods. The aim of the agreement is to improve market access and
investment opportunities and to support ongoing economic reforms in
Tunisia. The discussions were launched in Tunis on 13 October 2015,
followed by preliminary discussions during the week of 19-22 October
2015. The first round of negotiations took place in Tunis during the
week of 18-22 April 2016. The EU is Tunisia's main trading partner
(accounting for 75% of its exports and 63% of its overall trade). Total
trade in 2015 was estimated at more than EUR 20 billion. Tunisia's main
exports to the EU are machinery and transport equipment (41%), textile
and clothing products (24%), and agricultural products (8.5%). The
EU's main exports to Tunisia are machinery and transport equipment
(36 %), textile and clothing products (12 %), fuel and mining products
(10 %) and chemicals (8 %).

Better access for olive oil

The Euro-Mediterranean Association Agreement, signed in 1995,
provides for a zero-duty annual import quota of 56 700 tonnes of olive
oil originating in Tunisia. The 2015 terrorist attacks in Tunis and
Sousse have pushed the EU to help Tunisia through concrete and
short-term measures. To that end, in September 2015 - at the initiative
of the EU's foreign ministers - the EU proposed abolishing the monthly
limit on imports to the EU of Tunisian olive oil, and allowing an
additional 35 000 tonnes to be imported to the EU each year for a period
of two years, effective since 2016 and to introduce emergency
autonomous trade measures, providing a zero-duty tariff quota of 35 000
tonnes additional per year over a two-year period (2016-2017, 70 000
tonnes in total), in addition to the existing 56 700 tonnes provided for
under the EU-Tunisia Association Agreement.

The regulation (EU) 2016/580 on the introduction of emergency
autonomous trade measures for the Republic of Tunisia was adopted by the
European Parliament and the Council on 13 April 2016.

The Commission has presented in December 2016 a mid-term evaluation
on the impact of this autonomous trade measure on the EU olive oil
market.

Tunisian olive oil provides direct and indirect employment to over a
million people and accounts for a fifth of the country's total
agricultural employment. The initiative improves access for exports of
Tunisian olive oil to the EU, and provides Tunisia with a much-needed
economic advantage by lending significant support to the
country's balance of trade.

Macro financial Assistance (MFA)

What macro financial assistance does Tunisia already receive?

MFA is an exceptional crisis-response instrument
set up by the EU to assist neighbouring countries experiencing severe
balance of payments difficulties. In September 2014, the EU and the
Tunisian authorities signed an initial loan agreement and a memorandum
of understanding on MFA for Tunisia amounting to EUR 300 million. Two disbursements,
each for EUR 100 million, were made in 2015. A third and final
instalment, for the same amount, should be disbursed this year if the
agreed conditions are met.

The terrorist attacks in 2015 and the resulting security issues had a
severe impact on the Tunisian economy, affecting key sectors such as
tourism and transport. This exacerbated the existing balance of payments
problems. The EU's macro financial assistance programme will therefore
help cover Tunisia's external financing needs in 2016 and 2017, while
supporting reforms aimed at achieving a more sustainable balance of
payments and budgetary situation, improving the investment climate and
fostering regulatory convergence with the EU.

On 12 February 2016, at Tunisia's request and after carrying out an
ex ante evaluation, the Commission proposed additional MFA for Tunisia
of up to EUR 500 million in medium-term loans to supplement a new IMF
support programme for 2016-2020, which was signed in May 2016. This proposal was
approved by the European Parliament and adopted by the Council in July
2016 under the ordinary legislative procedure. The Protocol of the
agreement for programme II of macro financial assistance was signed in
Brussels on 27 April 2017.

Partnership with the European Investment Bank (EIB)

Since 2011, the EIB has signed financing agreements worth a total of
EUR 1.5 billion for the implementation of new projects in key sectors of
the Tunisian economy, such as energy, SMEs, infrastructure, education
and social housing. In 2015, EIB loans to Tunisia stood at
EUR 200 million.

The EIB finances a number of key investment
projects, notably 'ETAP', a EUR 380 million Southern Tunisian gas
project, signed in 2014. The project entails the development of a vast
natural gas facility (known as 'NAWARA') in the south of the country, a
370 km pipeline and a gas treatment unit in Gabès.

With regard to SMEs, the Bank has made available a credit line worth EUR 50 million to Amen Bank in partnership with the business network, Réseau Entreprendre, to support Tunisian industrial and commercial enterprises.

The EU has also committed a total of EUR 90.5 million for the
Neighbourhood Investment Facility in Tunisia for the period 2008-2015.
With this instrument the EU can award grants to complement loans
provided by European development institutions (EIB, EBRD, AFD, KfW) in
key areas such as energy, transport, the environment and private sector
development.

Cooperation in the field of education

In 2017-2018, the EU will provide additional assistance worth EUR 10 million to Tunisia under Erasmus +
in order to increase the numbers of exchanges of students and staff
between Tunisia and Europe. Over the next two years, this funding will
enable 1 500 students, youth, and higher education staff, in Europe and
Tunisia to study, train or teach abroad and exchange their experiences.

The EU will also use this additional funding to step up cooperation
between universities in the EU and Tunisia, through additional projects designed to help modernise higher education institutions.

Higher education aside, Erasmus + will also boost cooperation between Tunisian and European youth organisations
by supporting informal education activities. The EU will also support
culture and creativity in Tunisia by encouraging these two sectors to
participate in EU programmes such as 'Creative Europe', to which Tunisia will adhere.